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Page 1 of 4 October 2014 PRACTICAL FARMERS OF IOWA www.practicalfarmers.org Horticulture Winter Greens Production: Sales Revenue and Energy Costs working together, always learning PRACTICAL Staff Contact: Liz Kolbe (515) 232-5661 [email protected] Cooperators: Lee Matteson and Rose Schick – Nevada Funding By: CERES Web Link: http://bit.ly/pfi_horticulture Research Lee Matteson and Rose Schick (left) operate Lee’s Greens in Nevada, Iowa. They use an insulated germination room (right) to start tomatoes and herbs for indoor production. In a Nutshell We compare the energy use of winter high tunnel production to the product revenue during the first season of operation. Greenhouses and high tunnels allow farmers to extend the growing season. Greenhouses and high tunnels can increase revenue per square foot. Managed properly, the increased revenue can offset the expense of additional infrastructure. In the first winter of production, Lee’s Greens was able to keep their revenue above their energy costs. Propane was the bulk of the energy expenditure. Project Timeline: September 2013 – January 2014 About the Cooperators Lee’s Greens, located in Nevada, IA, is owned and operated by Lee Matteson and Rose Schick. Matteson and Schick both have academic and practical backgrounds in indoor horticultural production; the winter of 2013-2014 was their first at Lee’s Greens, their new joint venture. In addition to specializing in winter greens they will have early greenhouse tomatoes and in future years, outdoor production of fruits and vegetables. Background Greenhouses and high tunnels allow farmers to push the limits of Iowa’s seasons, getting an early start and a late end to the production window. Practical Farmers and other agricultural research programs have studied the economic returns and production feasibility for a variety of crops in greenhouses (Worley, 2009-2012). Overwhelmingly, these studies find that using a high tunnel or greenhouse can increase revenue per square foot, and if managed properly the increased revenue can offset the expense of additional infrastructure (Butler, 2013; Chase and Naeve, 2012; Blomgren and Frisch, 2007; McLaskey, 2011). Lee Matteson and Rose Schick of Lee’s Greens are pushing their greenhouses harder than most, producing leafy greens for direct markets in central Iowa throughout the winter. The winter of 2013-2014 was Lee’s Greens’ first year in production, and was also the coldest winter (by summation of heating degree days) since 1978 (ISU, 2014). The biting cold coincided with an unprecedented spike in propane prices, which peaked at $4.70/gal in Iowa during January 2014, more than doubling any seasonal price for the last 10 years (USEIA, 2014). Lee’s Greens shared the revenue data from their first winter in production with Practical Farmers along with their monthly expenses for propane, water, and electricity used for their germination room and four greenhouses, which occupy over 12,000ft 2 . The objective of this project was to compare the energy use of winter high tunnel production to the product revenue during the first season of operation.
Transcript
Page 1: Horticulture - Practical Farmers of IowaPFI’s Cooperators’ Program gives farmers practical answers to questions they have about on-farm challenges through research, record-keeping,

Page 1 of 4 October 2014PRACTICAL FARMERS OF IOWA www.practicalfarmers.org

Horticulture

Winter Greens Production: Sales Revenue and Energy Costs

working together, always learning

PRACTICAL

Staff Contact:Liz Kolbe – (515) [email protected]

Cooperators:•Lee Matteson and Rose Schick – Nevada

Funding By:CERES

Web Link:http://bit.ly/pfi_horticulture

Research

Lee Matteson and Rose Schick (left) operate Lee’s Greens in Nevada, Iowa. They use an insulated germination room (right) to start tomatoes and herbs for indoor production.

In a NutshellWe compare the energy use of winter high tunnel production to the product revenue during the first season of operation.

• Greenhousesandhightunnelsallowfarmerstoextendthegrowingseason.

• Greenhousesandhightunnelscanincreaserevenuepersquarefoot.

• Managedproperly,theincreasedrevenuecanoffsettheexpenseofadditionalinfrastructure.

• Inthefirstwinterofproduction,Lee’sGreenswasabletokeeptheirrevenueabovetheirenergycosts.

• Propanewasthebulkoftheenergyexpenditure.

ProjectTimeline:September2013–January2014

About the Cooperators

Lee’sGreens,locatedinNevada,IA,isownedandoperatedbyLeeMattesonandRoseSchick.MattesonandSchickbothhaveacademicandpracticalbackgroundsinindoorhorticulturalproduction;thewinterof2013-2014wastheirfirstatLee’sGreens,theirnewjointventure.Inadditiontospecializinginwintergreenstheywillhaveearlygreenhousetomatoesandinfutureyears,outdoorproductionoffruitsandvegetables.

Background

GreenhousesandhightunnelsallowfarmerstopushthelimitsofIowa’sseasons,gettinganearlystartandalateendtotheproductionwindow.Practical

Farmersandotheragriculturalresearchprogramshavestudiedtheeconomicreturnsandproductionfeasibilityforavarietyofcropsingreenhouses(Worley,2009-2012).Overwhelmingly,thesestudiesfindthatusingahightunnelorgreenhousecanincreaserevenuepersquarefoot,andifmanagedproperlytheincreasedrevenuecanoffsettheexpenseofadditionalinfrastructure(Butler,2013;ChaseandNaeve,2012;BlomgrenandFrisch,2007;McLaskey,2011).

LeeMattesonandRoseSchickofLee’sGreensarepushingtheirgreenhousesharderthanmost,producingleafygreensfordirectmarketsincentralIowathroughoutthewinter.Thewinterof2013-2014wasLee’sGreens’firstyearinproduction,andwasalsothecoldestwinter(bysummationofheatingdegree

days)since1978(ISU,2014).Thebitingcoldcoincidedwithanunprecedentedspikeinpropaneprices,whichpeakedat$4.70/galinIowaduringJanuary2014,morethandoublinganyseasonalpriceforthelast10years(USEIA,2014).

Lee’sGreenssharedtherevenuedatafromtheirfirstwinterinproductionwithPracticalFarmersalongwiththeirmonthlyexpensesforpropane,water,andelectricityusedfortheirgerminationroomandfourgreenhouses,whichoccupyover12,000ft2.

Theobjectiveofthisprojectwastocomparetheenergyuseofwinterhightunnelproductiontotheproductrevenueduringthefirstseasonofoperation.

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Page 2 of 4 October 2014PRACTICAL FARMERS OF IOWA www.practicalfarmers.org

Method

MattesonandSchickprovidedPracticalFarmerswiththeirmonthlyrevenuebycropandCSAsharesaswellasmonthlyenergyspendingdatafromSeptember2013–January2014.Propanewasreportedbybulkpurchase,whichlinedupwithmonthlyreportingofelectricity,water,andrevenue.Thefourgreenhousesaredripirrigatedandheatedthroughthesoil;electricityusedatthefarmwasforthelightsinthesmall,insulatedgerminationroominthepackhouse.

Results and Discussion

Forthreeofthefivemonthsdatawasreported,Lee’sGreensrevenuefromleafygreensoutpacedtheexpensesfromwater,electricity,andpropane(Figure 1).ThelargestmarginwasinOctober,with$5,139ofnetrevenue.ThelargestmonthofrevenuecameinNovember,with$8,204(Figure 2).Lettucemixledsaleseverymonth,followedconsistentlybyspinachandredkale;arugulaandCSAsharessaleseachmadeamonthlystandoutinOctoberandNovember,respectively.SalesofCSAsharesinNovemberareparticularlynotablebecauseitisrevenueforfutureproducedeliveries;thusthehighNovemberrevenuemayhavecontributedtothelowerreportedrevenueinDecemberandJanuary.Becausethisyearwastheirfirstinproduction,thefirstmonthofreportedexpenseshadnorevenue–infutureyearsthatrevenuegapwillbefilled.

Theenergyexpendituresweredominatedbypropanepurchases.Figure 3showsthemagnitudeofdifferencebetweenpropane,electricity,andwater;thecostofpropaneinJanuarywasmorethanalltheotherenergyexpenditurescombined.Thissignificantjumpinexpensewasduetothehistoricallycoldwinterandhighpropaneprices.InJanuary2014Lee’sGreenshadtobuyanadditional900gallonsofpropaneat$4.64/gal(Figure 4).IfpropanepriceshadnotspikedastheydidinJanuary,Lee’sGreenswouldhavesavednearly$3,000ontheirpropanepurchasethatmonth.

Thoughnotincludedintheanalysis,Lee’sGreens’deliverymileagetotaled6,170miles,equalto$3,455infederalmileagereimbursement($0.56/mi).Intermsofenergyused,however,thepropaneuseforthewinterwasanestimated15timesthatofgasolinefordeliveries.

Infutureyearsthewintergreenswillbeprecededbyatomatocrop,whichisexpectedtoproducehigherrevenuewith

lessenergycostthanthewintergreens,furtherincreasingtheannualrevenuemargin.

Conclusions and Next Steps

Intheirfirstwinterofproduction,Lee’sGreenswasabletokeeptheirrevenueabovetheirenergycosts.Propanewasthebulkoftheenergyexpenditure,unsurprisingduringoneofthecoldestwintersinIowa’shistorycoupledwithrecordpropaneprices.“Thisyearkindofthrewusforaloop,withthehighpropaneprices,”saidco-ownerandgrowerRoseSchick.

$-

$1,000.00

$2,000.00

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Sep-13 Oct-13 Nov-13 Dec-13 Jan-14

Total Energy Expense and Sales Revenue

ExpensesRevenue

Figure 1

$0.00

$500.00

$1,000.00

$1,500.00

$2,000.00

$2,500.00

$3,000.00

$3,500.00

Oct-13 Nov-13 Dec-13 Jan-14

Revenue by Crop

LettuceMix

Spinach

RedKale

Arugula

GreenKale

SwissChard

Radishes

CSA

Romaine

Figure 2

“Wedidacouplelittletrickstosavesomemoneyonpropane–wecleanedoutsomebedsthatweredoneandjustleftthemcold,thendelayedplantingtheearlytomatoesbytwoweeks,”saidMatteson.“OurgoalfortomatoeswastohitthefirstofMay,givingusallofMayandJunebeforeanyoneelsegetstomatoes.Youcanplantearlier[thanFebruary],butthecoldandlightwillholdthemback.”

Anothertricktoefficientuseofheatingisthesizeandshapeofthegreenhouse.“Withheating–thelargerthehouse,thebetter,”saidMatteson.Lee’sGreens’greenhousesareaswideaspossible(34’)

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Page 3 of 4 October 2014PRACTICAL FARMERS OF IOWA www.practicalfarmers.org

withoutrequiringadditionalsupports.“Whenthehousesaresmaller,thecoldstartscreepinginfromthesidesduetoalargersurfaceareatovolumeratio,”saidMatteson.

Intheirfirstyearofproduction,Lee’sisdoingafewadditionalthingstoincreasecashflow,includingjams,herbsinthegerminationroomandsummervegetables,buteventuallytheyhopetomoveexclusivelytowardfruitsandoff-seasongreenhouseproduction.They’realsotrialing15differenttomatovarieties–grafted,artesian,heirloomandgreenhousevarieties.SaidMatteson,“We’vestruggledwithheirloomvarietiesinthegreenhouse.Theygetpowderymildew,theycrack–youdon’tgetnearlytheproduction.Restaurantswantthem,sowe’retryingafewgraftedvarietiesthisyear.”

SchickandMattesonareunfazedbyacomplexbedrotationscheduleandexpandingproduction.“Wecandoit,”said

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Sep-13 Oct-13 Nov-13 Dec-13 Jan-14Water $113.49 $138.79 $46.04 $29.18 $48.36

Electric $72.20 $182.75 $252.47 $359.69 $393.71

Propane $0.00 $0.00 $3,875.28 $2,198.01 $8,262.36

Energy Expenditure by SourceFigure 3

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Propane $/GalFigure 4

Schick,“wejustneedtoseeifit’sgoingtomakeusanymoney!”Todothat,theyemphasizebuildingrelationshipswithchefsandgettingchefsandbuyersuptoseetheirproduction.“It’simportantforchefstounderstandhowwe’regrowingthesegreensinthewinterandwhywestartrunningout.Theycanseewherewe’vejustharvestedandthatitwilltakesometimetogrowback.InSeptemberandOctoberweweregrowingarugulain1.5-2weeks;fromDecembertoFebruaryittakes4-6weeks,”saidMatteson.Schickechoed,“InJanuaryyoucanreallytellthingswon’tgrowasfastduetothedarkness.That’sthehardthingaboutworkingwithchefs–justasyougetthemhookedonyourproduct,thingsstartslowingdownandprettysoonwe’resaying,‘thanksforyourbusiness…hopeyourememberusnextyear!’”

Freshly harvested lettuce shares a bed with swiss chard (above). Below, beds have early tomatoes interplanted with lettuce, and green and red lettuce planted in the inside rows.

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Page 4 of 4 October 2014PRACTICAL FARMERS OF IOWA www.practicalfarmers.org

References

Worley,Sally.2011.BlueGateFarmHighTunnels:Take3.PracticalFarmersofIowa.http://bit.ly/pfi_horticulture.

Worley,Sally.2012BlueGateHighTunnelsRecordKeepingProject:Winter,Season3.PracticalFarmersofIowa.http://bit.ly/pfi_horti-culture.

Worley,Sally.2010BlueGateHighTunnels:Take2.PracticalFarmersofIowa.http://bit.ly/pfi_horticulture.

Worley,Sally.2009HighTunnels:AreTheyLucrative?PracticalFarmersofIowa.http://bit.ly/pfi_horticulture.

Butler,Bryan.SuccessBasicsinHighTunnelProduction:ThreeMarylandCaseStudies.UniversityofMaryland,2013.

Chase,Craig,andLindaNaeve.2012.VegetableProductionBudgetsforaHighTunnel.Ames,IA:IowaStateUniversityExtension.http://store.extension.iastate.edu/Product/Vegetable-Production-Budgets-for-a-High-Tunnel-PDF.

Blomgren,Ted,andTracyFrisch.2007.HighTunnels:UsingLow-costTechnologytoIncreaseYields,ImproveQuality,andExtendtheSeason.UniversityofVermontCenterforSustainableAgriculture.http://www.uvm.edu/~susagctr/resources/HighTunnels.pdf

McLaskey,Steve.2011.FeasibilityofUnheatedLargeGutter-connectGreenhousesforWinterOrganicVegetableProductioninIowa.LeopoldCenterforSustainableAgriculture,IowaStateUniversity.

IowaStateUniversityofScienceandTechnology,IowaEnvironmentalMesonet.2014.ClimodatReports,Iowa,CentralDivision.http://mesonet.agron.iastate.edu/climodat/index.phtml?network=IACLIMATE&station=IAC005&report=18

U.S.EnergyInformationAdministration.2014.WeeklyIowaPropaneResidentialPrice.http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=W_EPLLPA_PRS_SIA_DPG&f=W

PFI Cooperators’ Program

PFI’sCooperators’Programgivesfarmerspracticalanswerstoquestionstheyhaveabouton-farmchallengesthroughresearch,record-keeping,anddemonstrationprojects.TheCooperators’Programbeganin1987withfarmerslookingto save money throughmore judicious use of inputs. If you are interested in conducting an on-farm trial contact

StefanGailans@[email protected].


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